Making a level-headed assessment of potential risks is important to every phase of your financial planning – especially in the later stages of life. Your future health can be one of the most emotionally difficult subjects to consider. It can also be one of the most financially challenging – and potentially damaging – if you haven’t weighed all your options and made some key decisions.
Even if you are in good health, look ahead and start thinking about these three key areas where your health care and financial plans intersect.
1. Review your Medicare coverage and supplemental options.
Many people head into retirement with unrealistic expectations about their health care coverage. For one, Medicare is not free. You won’t pay a premium for Part A, which covers inpatient hospital treatment. Based on your income, you will pay premiums for Part B (doctor’s visits) and Part D (prescription drug coverage). You’ll also be paying out of pocket if you want a Part C Medicare Advantage plan from a private insurer.
Another common misconception is that Medicare covers everything. Unfortunately, Medicare A and B won’t pay for things like eye exams, dental care, or hearing aids. The coverage also does not include long-term care or in-home nursing. If you have ongoing health problems, this could be a crucial gap.
That is why it is so important to sit down with a knowledgeable professional every year during the annual Medicare Open Enrollment period from October 15 to December 7. As your health care needs change throughout retirement, you should feel confident your Medicare coverage is keeping pace and staying within your budget.
Supplemental insurance can help cover some of the things that standard Medicare doesn’t, such as copayments, coinsurance, deductibles, and health care costs incurred while traveling abroad. Known as Medigap, you can purchase a supplemental policy from private insurance companies. If you need extensive outpatient services such as kidney dialysis, having additional insurance goes a long way in offsetting those costs.
2. Understand your need for long-term care.
The U.S. Department of Health and Human Services estimates that a 65-year-old has a 70% chance of needing long-term care at some point. The earlier you start planning for that likelihood, the more options you have. One option is long-term care insurance, but depending on your age and medical condition, it can be difficult to purchase long-term care insurance when you need it the most. Whenever a chronic condition, trauma, or illness limits an individual’s ability to carry out basic tasks of self-care, long-term care is necessary.
In the years prior to retirement, some older adults choose to create a dedicated health care savings bucket to pay for extra medical expenses. While you’re still working and you have a qualified high-deductible insurance plan, you can open a tax-advantaged Health Savings Account (HSA) and accumulate funds you can use in the future to pay for long-term care or other medical expenses.
Some life insurance policies allow you to add an accelerated benefits rider to your existing policy to cover long-term care costs. Consider locking in a more affordable rate by purchasing a policy when you’re younger and healthier.
3. Prepare your loved ones.
You’re under no obligation to share every detail of your plan or your health with your loved ones. But if a debilitating illness or your wishes for how you’d like to receive care come as a surprise to your loved ones, the shock will make a difficult situation even harder, and maybe even contentious.
Opening this line of dialogue can be challenging. It can also be incredibly rewarding and allow you to see the support you’ll have as you age. We’ve helped many of our clients facilitate conversations that move beyond money and address current or potential health needs. Allow your support network of family members, close friends, and neighbors to start thinking about how they can be there for you.
Of all the things your planning is meant to provide, your safety and security are at the top of the list. Speaking with a trusted advisor can educate you on the public and private networks available. Discover more about Marca Life Planning’s Age in Place program, and work with us to learn how to prepare for your health in retirement and start planning for the care you’ll need.